Housebuilding defies overall construction decline

Office for National Statistics (ONS) figures published today (11 January) show that construction output declined again 0.2% in November 2016.

This follows a 0.6% fall in October and a 0.8% contraction recorded in the third quarter of 2016.

Commenting on the figures, Rebecca Larkin, senior economist at the Construction Products Association (CPA), said: "Overall weakness in official construction output data looks to have persisted in the final three months of 2016, which stands in contrast to other industry surveys. One common theme reported in recent months, however, is the outperformance of private housing relative to other sectors such as commercial, industrial and repair and maintenance.

"In November, private housing output rose 0.5% to reach the highest level since 2010 and compared to a year earlier, output increased 12.5%. Activity has no doubt been sustained by government support measures such as Help to Buy, strong growth in house prices and the availability of low-interest mortgages.

"Economic and political uncertainty is expected to intensify this year and, combined with rising inflation denting confidence, means we are unlikely to see similar growth rates in private housing in 2017. Public housing, on the other hand, increased 5.6% in November and while monthly data can be volatile, this could signal a pickup in public sector house building after activity has been disrupted by two years of changes to funding programmes."

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Construction output in January 2016 fell by 0.2% compared to the previous month, according to the latest Office for National Statistics (ONS) figures, but the sector has still seen growth in new orders.

ONS figures show that construction output in November rose by 0.4% in both monthly and annual terms. However, monthly data are volatile and on a rolling three-month basis, output declined 2.0%. This was the largest fall since August 2012.

Office for National Statistics (ONS) figures published last week show that construction output in October fell by 1.7% and was 0.2% lower compared with one year earlier. New orders in Q3 rose 37.4% over the quarter and 25.5% on an annual basis.